Helen of Troy (HELE)

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments must be used in the calculation of certain tax assets and liabilities because of differences in the timing of recognition of revenue and expense for tax and financial statement purposes. We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. As changes occur in our assessments regarding our ability to recover our deferred tax assets, our tax provision is increased in any period in which we determine that the recovery is not probable.

In addition, the calculation of our tax liabilities requires us to account for uncertainties in the application of complex tax regulations. As a result of the implementation of FIN 48, we recognize liabilities for uncertain tax positions based on the two-step process prescribed within the interpretation. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit based upon its technical merits, including resolution of related appeals or litigation processes, if any.  The second step requires us to estimate and measure the tax benefit as the largest amount that has greater than a 50 percent likelihood of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, historical experience with similar tax matters, guidance from our tax advisors, and new audit activity.  A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period in which the change occurs.

60

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments must be used in the calculation of certain tax assets and liabilities because of differences in the timing of recognition of revenue and expense for tax and financial statement purposes. We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. As changes occur in our assessments regarding our ability to recover our deferred tax assets, our tax provision is increased in any period in which we determine that the recovery is not probable.

In addition, the calculation of our tax liabilities requires us to account for uncertainties in the application of complex tax regulations. As a result of the implementation of FIN 48, we recognize liabilities for uncertain tax positions based on the two-step process prescribed within the interpretation. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit based upon its technical merits, including resolution of related appeals or litigation processes, if any.  The second step requires us to estimate and measure the tax benefit as the largest amount that has greater than a 50 percent likelihood of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, historical experience with similar tax matters, guidance from our tax advisors, and new audit activity.  A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period in which the change occurs.

60

We must make certain estimates and judgments in
determining income tax expense for financial statement purposes. These
estimates and judgments must be used in the calculation of certain tax assets
and liabilities because of differences in the timing of recognition of revenue
and expense for tax and financial statement purposes. We must assess the
likelihood that we will be able to recover our deferred tax assets. If recovery
is not likely, we must increase our provision for taxes by recording a
valuation allowance against the deferred tax assets that we estimate will not
ultimately be recoverable. As changes occur in our assessments regarding our
ability to recover our deferred tax assets, our tax provision is increased in
any period in which we determine that the recovery is not probable.

In addition, the calculation of our tax liabilities
requires us to account for uncertainties in the application of complex tax
regulations. As a result of the implementation of FIN 48, we recognize
liabilities for uncertain tax positions based on the two-step process
prescribed within the interpretation. The first step is to evaluate the tax
position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained
on audit based upon its technical merits, including resolution of related
appeals or litigation processes, if any. 
The second step requires us to estimate and measure the tax benefit as
the largest amount that has greater than a 50 percent likelihood of being
realized upon ultimate settlement. It is inherently difficult and subjective to
estimate such amounts, as this requires us to determine the probability of
various possible outcomes. We reevaluate these uncertain tax positions on a
quarterly basis. This evaluation is based on factors including, but not limited
to, changes in facts or circumstances, changes in tax law, effectively settled
issues under audit, historical experience with similar tax matters, guidance
from our tax advisors, and new audit activity. 
A change in recognition or measurement would result in the recognition
of a tax benefit or an additional charge to the tax provision in the period in
which the change occurs.

60

We must make certain estimates and judgments in
determining income tax expense for financial statement purposes. These
estimates and judgments must be used in the calculation of certain tax assets
and liabilities because of differences in the timing of recognition of revenue
and expense for tax and financial statement purposes. We must assess the
likelihood that we will be able to recover our deferred tax assets. If recovery
is not likely, we must increase our provision for taxes by recording a
valuation allowance against the deferred tax assets that we estimate will not
ultimately be recoverable. As changes occur in our assessments regarding our
ability to recover our deferred tax assets, our tax provision is increased in
any period in which we determine that the recovery is not probable.

In addition, the calculation of our tax liabilities
requires us to account for uncertainties in the application of complex tax
regulations. As a result of the implementation of FIN 48, we recognize
liabilities for uncertain tax positions based on the two-step process
prescribed within the interpretation. The first step is to evaluate the tax
position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained
on audit based upon its technical merits, including resolution of related
appeals or litigation processes, if any. 
The second step requires us to estimate and measure the tax benefit as
the largest amount that has greater than a 50 percent likelihood of being
realized upon ultimate settlement. It is inherently difficult and subjective to
estimate such amounts, as this requires us to determine the probability of
various possible outcomes. We reevaluate these uncertain tax positions on a
quarterly basis. This evaluation is based on factors including, but not limited
to, changes in facts or circumstances, changes in tax law, effectively settled
issues under audit, historical experience with similar tax matters, guidance
from our tax advisors, and new audit activity. 
A change in recognition or measurement would result in the recognition
of a tax benefit or an additional charge to the tax provision in the period in
which the change occurs.

60

We must make certain estimates and judgments in
determining income tax expense for financial statement purposes. These
estimates and judgments must be used in the calculation of certain tax assets
and liabilities because of differences in the timing of recognition of revenue
and expense for tax and financial statement purposes. We must assess the
likelihood that we will be able to recover our deferred tax assets. If recovery
is not likely, we must increase our provision for taxes by recording a
valuation allowance against the deferred tax assets that we estimate will not
ultimately be recoverable. As changes occur in our assessments regarding our
ability to recover our deferred tax assets, our tax provision is increased in
any period in which we determine that the recovery is not probable.

In addition, the calculation of our tax liabilities
requires us to account for uncertainties in the application of complex tax
regulations. As a result of the implementation of FIN 48, we recognize
liabilities for uncertain tax positions based on the two-step process
prescribed within the interpretation. The first step is to evaluate the tax
position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained
on audit based upon its technical merits, including resolution of related
appeals or litigation processes, if any. 
The second step requires us to estimate and measure the tax benefit as
the largest amount that has greater than a 50 percent likelihood of being
realized upon ultimate settlement. It is inherently difficult and subjective to
estimate such amounts, as this requires us to determine the probability of
various possible outcomes. We reevaluate these uncertain tax positions on a
quarterly basis. This evaluation is based on factors including, but not limited
to, changes in facts or circumstances, changes in tax law, effectively settled
issues under audit, historical experience with similar tax matters, guidance
from our tax advisors, and new audit activity. 
A change in recognition or measurement would result in the recognition
of a tax benefit or an additional charge to the tax provision in the period in
which the change occurs.

60

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments must be used in the calculation of certain tax assets and liabilities because of differences in the timing of recognition of revenue and expense for tax and financial statement purposes. We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. As changes occur in our assessments regarding our ability to recover our deferred tax assets, our tax provision is increased in any period in which we determine that the recovery is not probable.

In addition, the calculation of our tax liabilities requires us to account for uncertainties in the application of complex tax regulations. As a result of the implementation of FIN 48, we recognize liabilities for uncertain tax positions based on the two-step process prescribed within the interpretation. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit based upon its technical merits, including resolution of related appeals or litigation processes, if any.  The second step requires us to estimate and measure the tax benefit as the largest amount that has greater than a 50% likelihood of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, historical experience with similar tax matters, guidance from our tax advisors, and new audit activity.  A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period in which the change occurs.

We
must make certain estimates and judgments in determining income tax expense for
financial statement purposes. These estimates and judgments must be used in the
calculation of certain tax assets and liabilities because of differences in the
timing of recognition of revenue and expense for tax and financial statement
purposes. We must assess the likelihood that we will be able to recover our
deferred tax assets. If recovery is not likely, we must increase our provision
for taxes by recording a valuation allowance against the deferred tax assets
that we estimate will not ultimately be recoverable. As changes occur in our
assessments regarding our ability to recover our deferred tax assets, our tax
provision is increased in any period in which we determine that the recovery is
not probable.

In
addition, the calculation of our tax liabilities requires us to account for
uncertainties in the application of complex tax regulations. As a result of the
implementation of FIN 48, we recognize liabilities for uncertain tax positions
based on the two-step process prescribed within the interpretation. The first
step is to evaluate the tax position for recognition by determining if the
weight of available evidence indicates that it is more likely than not that the
position will be sustained on audit based upon its technical merits, including
resolution of related appeals or litigation processes, if any.  The second step requires us to estimate and
measure the tax benefit as the largest amount that has greater than a 50%
likelihood of being realized upon ultimate settlement. It is inherently
difficult and subjective to estimate such amounts, as this requires us to
determine the probability of various possible outcomes. We reevaluate these
uncertain tax positions on a quarterly basis. This evaluation is based on
factors including, but not limited to, changes in facts or circumstances,
changes in tax law, effectively settled issues under audit, historical
experience with similar tax matters, guidance from our tax advisors, and new
audit activity.  A change in recognition
or measurement would result in the recognition of a tax benefit or an
additional charge to the tax provision in the period in which the change
occurs.

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments must be used in the calculation of certain tax assets and liabilities because of differences in the timing of recognition of revenue and expense for tax and financial statement purposes. We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. As changes occur in our assessments regarding our ability to recover our deferred tax assets, our tax provision is increased in any period in which we determine that the recovery is not probable.

In addition, the calculation of our tax liabilities requires us to account for uncertainties in the application of complex tax regulations. As a result of the implementation of FIN 48, we recognize liabilities for uncertain tax positions based on the two-step process prescribed within the interpretation. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit based upon its technical merits, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that has greater than a 50% likelihood of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, historical experience with similar tax matters, guidance from our tax advisors, and new audit activity. A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period in which the change occurs.

For a more comprehensive list of our accounting policies, we encourage you to read Note 1 - Summary of Significant Accounting Policies, accompanying the consolidated financial statements included in our latest annual report on Form 10-K for the year ended February 28, 2007. Note 1 to the consolidated financial statements included with Form 10-K contains several other policies, including policies governing the timing of revenue recognition, that are important to the preparation of our consolidated financial statements, but do not meet the SEC’s definition of critical accounting policies because they do not involve subjective or complex judgments.

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